Olonjrjssinnal  ltaml 


SIXTY-NINTH  CONGRESS,  FIRST  SESSION 


OUR  PREARMISTICE  LOANS 


They  were  virtually  our  only  substantial  contribution  to  the  carry¬ 
ing  on  of  our  war  during  nearly  three-quarters  of  the  period  of  our 
participation.  They  were  the  means  of  saving  for  us  vastly  greater 
expenditure  and  of  sparing  hundreds  of  thousands  of  American  lives. 
We  can  no  more  consider  to-day  those  advances  as  mere  business  deal¬ 
ings  between  borrowers  and  lenders  than  did  those  who  authorized 
them  nine  years  ago. 


SPEECH 

OF 

HON.  A.  PIATT  ANDREW 

OF  MASSACHUSETTS 

IN  THE 


HOUSE  OF  REPRESENTATIVES 


WEDNESDAY,  JANUARY  13,  192G 


ir 


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WASHINGTON 

GOVERNMENT  PRINTING  OFFICE 
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V 


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OUR  PREARMISTICE  LOANS 


SPEECH 

Off 

HON.  A.  PIATT  ANDREW 

Mr.  ANDREW.  Mr.  Chairman  and  gentlemen  of  the  com¬ 
mittee,  I  had  asked  for  and  hoped  to  be  allotted  a  longer  time 
to  speak  on  this  question,  because  throughout  the  many  hour3 
of  debate,  and  until  the  last  speaker  addressed  the  committee, 
no  one,  so  far  as  I  can  recall,  has  more  than  alluded  to  what, 
in  my  judgment,  is  the  most  important  aspect  of  the  question  of 
the  foreign  debts,  namely,  their  origin.  Most  of  those  who 
have  spoken  during  this  time  have  treated  these  debts  as  if 
they  were,  all  of  them,  simply  ordinary  debts,  and  yet  a  very 
large  proportion  of  the  debts  were  based  on  loans  which 
primarily  were  payments  for  services  rendered  to  our  coun¬ 
try,  payments  made  by  the  United  States  to  the  other  coun¬ 
tries  associated  with  us  in  the  war  for  very  important  serv¬ 
ices,  payments  for  services  which  saved  our  country  many 
precious  lives  and  a  vastly  greater  expenditure  of  money.  I 
can  not,  in  the  brief  period  that  is  allotted  to  me,  more  than 
sketch  an  outline  of  the  case  which  I  should  like  to  have  pre¬ 
sented  to  you,  and,  therefore,  Mr.  Chairman,  I  ask  permission 
to  extend  what  I  shall  say  to-day  at  greater  length  in  the 
Record. 

The  CHAIRMAN.  The  gentleman  from  Massachusetts  asks 
unanimous  consent  to  revise  and  extend  his  remarks  in  the 
Record.  Is  there  objection? 

There  was  no  objection. 

Mr.  ANDREW.  Most  of  the  discussion  has  proceeded  on 
the  assumption  that  our  Government's  foreign  debts  are  all 
of  them  without  distinction,  like  any  other  kind  of  debts,  and 
that  all  of  them  bear  the  same  moral  as  well  as  legal  obliga¬ 
tion.  There  are  many,  however,  who  question  the  validity  of 
that  assumption  as  applied  to  certain  of  the  debts  and  believe 
that  just  settlements  with  some  of  the  countries  and  our  own 

country’s  reputation  for  fair  dealing  are  involved  in  the  issue. 

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No  one  doubts  that  the  debts  of  most  of  the  debtor  coun¬ 
tries  and  some  of  the  debts  of  all  the  debtor  countries — those 
arising  from  loans  made  after  the  armistice  for  purposes  of 
relief  and  reconstruction — are  assimilable  to  ordinary  debts 
and  involve  the  same  obligations.  But  we  can  not  overlook 
the  fact  that  a  very  large  proportion  of  what  were  technically 
loans  were  essentially  payments  made  by  our  Government  for 
service  rendered;  and  for  these,  no  matter  what  may  be  their 
documentary  form,  the  moral  right  to  demand  reimbursement 
is,  to  say  the  least,  doubtful.  In  order  to  appreciate  this,  we 
have  only  to  recall  the  circumstances  under  which  they  were 
made. 

As  a  good  deal  of  time  has  elapsed  since  then,  you  will 
perhaps  pardon  my  attempt  to  refresh  your  memories  of  those 
circumstances.  I  shall  recount  only  the  bare  facts  and  trust 
to  your  individual  recollections  of  what  happened  nine  years 
ago  to  supplement  them. 

Until  the  World  War  became  our  war  the  United  States 
Treasury  had  lent  nothing — not  a  cent — to  Belgium,  France, 
Italy,  Groat  Britain,  or  any  other  country  engaged  in  that 
war.  It  was  during  the  first  week  of  April,  1917,  that  the 
great  decision  was  made  by  Congress  on  the  advice  of  the 
President.  In  this  Hall  at  that  time  he  voiced  the  country’s 
will  in  pledging  to  the  task  “  our  lives  and  our  fortunes,  every¬ 
thing  that  we  are,  and  everything  that  we  have.”  We  could 
not  send  men  to  the  front  at  once,  for  we  had  only  a  paltry 
number  wdio  were  trained  and  prepared ;  and  although  we  set 
to  work  with  fabulous  zeal  to  get  vast  numbers  ready,  it  was 
evident  that  many  months — at  least  a  year  and  probably 
more — would  pass  before  we  should  have  troops  to  take  part 
in  the  war  in  which  we  were  already  launched.  But  if  we  had 
no  trained  soldiers,  we  had  factories  and  mines  capable  of 
producing  the  supplies  required  by  war ;  and  within  little  more 
than  a  week  after  the  declaration  a  bill  had  been  voted  by 
Congress  to  make  these  supplies  available  to  the  armies  then 
in  the  field. 

This  act  began  with  the  words — 

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For  the  purpose  of  more  effectually  providing  for  the  (our)  national 
security  and  defense,  and  prosecuting  the  (our)  war — - 

And  it  authorized  the  Secretary  of  the  Treasury  to  establish 
credits  for  governments — 

then  engaged  in  war  with  the  enemies  of  the  United  States. 

The  act  was  intended  to  make  possible  our  immediate  par¬ 
ticipation  in  what  was  now  our  war,  and  the  credits  were 
authorized  in  order  to  place  at  the  disposal  of  the  armies 
associated  with  us  in  the  ordeal  the  iron,  steel,  copper,  chemi¬ 
cals,  shells,  rifles,  powder,  explosives,  and  other  supplies  which 
we  had  or  could  produce  in  abundance  and  which  they  could 
use  in  holding  or  pushing  back  the  enemy. 

The  character  and  purpose  of  this  act  are  so  crucial  for  the 
understanding  of  the  whole  question  of  what  are  called  “  the 
allied  debts  ”  that  I  ask  your  indulgence  if  I  recall  to  your 
memory  a  few  of  the  things  said  on  the  floor  of  this  House 
and  of  the  Senate  when  the  bill  was  under  discussion.  I  will 
cite  only  the  words  of  influential  Members,  whose  reputation 
and  standing  are  known  to  you  all,  men  from  East,  West, 
North,  and  South,  irrespective  of  whether  they  were  Republi¬ 
cans  or  Democrats.  There  were  no  sectional  or  party  lines  in 
those  days  when  the  country  faced  war.  I  think  that  you  will 
be  interested  to  hear  some  of  the  opinions  expressed  at  that 
time,  for  they  have  a  bearing  upon  the  questions  we  face 
to-day. 

Mr.  Mann,  of  Illinois,  stated  the  case  very  clearly  on  April 
14,  1917 : 

We  are  not  prepared  to  place  m,en  in  the  field.  We  are  not  pre 
pared  to  fight  with  our  Army.  We  are  not  prepared  to  do  very  much 
with  our  Navy  ;  not  because  we  do  not  have  some  Navy  but  because 
there  is  little  opportunity  for  the  Navy  to  engage  in  actual  war  at 
this  time.  *  *  *  The  only  way  left  to  us  is  to  help  finance  those 
nations  who  are  fighting  our  enemy.  *  *  *  I  think  it  is  our 
highest  duty  in  the  making  of  war  to  give  aid  to  those  who  are 
fighting  the  enemy  against  whom  we  have  declared  war. 

Then  he  added : 

I  only  hope  and  pray  that  the  aid  thus  given  may  be  effectual 
enough  to  end  the  war  before  we  send  our  boys  to  the  trenches. 

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Let  me  quote  next  Mr.  Fordney,  of  Michigan : 

My  idea  is  that  those  people  are  much  in  need  of  money  to  prosecute 
this  war.  There  is  no  other  object  on  the  face  of  the  earth  in  the 
minds  of  the  American  people  in  loaning  European  nations  this  money. 
Their  only  purpose  is  to  aid  them  in  the  best  way  possible  to  fight  our 
battle  across  the  sea  without  calling  upon  our  men  to  go  there. 

And  now  Mr.  Mondell,  of  Wyoming: 

We  can  not  say  and  we  shall  not  say  that  we  will  not  send  our 
forces  to  any  battle  front  where  they  may  be  needed  to  accomplish 
the  purpose  of  the  declaration  of  the  Congress ;  but  we  sincerely  hope 
that  we  shall  not  be  called  upon  to  do  that  to  the  extent  of  sending 
men  to  fight  overseas.  But  we  can  effectively  and  in  the  immediate 
future  arm  and  strengthen  and  support  those  who  are,  since  our  decla¬ 
ration  of  war,  fighting  our  battles.  They  have  already  been  heartened 
and  strengthened  by  our  declaration  of  participation  iu  the  conflict,  and 
if  we  can  hearten  and  strengthen  them  further  by  large  supplies  of 
funds  and  strengthening  of  credit  it  is  our  duty  and  to  our  advantage 
to  do  so. 

That  is  what  three  Republican  leaders  thought  Let  us  pass 
to  the  other  side  of  the  House.  First,  Mr.  Kitchen,  of  North 

jar 

Carolina,  chairman  of  the  Ways  and  Means  Committee: 

You  will  understand  that  they  will  he  fighting  with  our  money  their 
battles,  and  we  will  be  fighting  with  our  money  our  battles,  too. 

And  he  added,  perhaps  as  an  additional  incentive — 

We  are  of  the  opinion  that  most  of  this  money  that  we  will  loan  to 
the  Allies  for  the  purchase  of  their  bonds  will  of  necessity  have  to  be 
expended  in  the  United  States. 

Mr.  Fitzgerald,  chairman  of  the  Appropriations  Commit¬ 
tee,  did  not  seem  to  be  very  much  concerned  about  eventual 
payment.  He  said : 

I  should  gladly  vote  to  give  $6,000,000,000  to  the  nations  arrayed 
on  the  same  side  with  us  if  we  could  win  this  war  without  sacrificing 
American  blood  and  American  lives.  I  have  little  sympathy  with  the 
suggestion  that  possibly  we  will  not  get  our  money  back.  I  care  not 
so  much  if  we  do  if  American  blood  and  American  lives  be  preserved 
by  the  grant  of  the  money. 

Mr.  Rainey  evidently  did  not  consider  the  credits  authorized 
by  the  bill  as  ordinary  loans.  He  said : 

We  are  not  making  this  loan  for  the  purpose  of  making  an  invest¬ 
ment  of  our  funds.  We  are  making  this  loan  in  order  to  further  our 
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interests  primarily  in  this  World  War,  and  from  that  moment  when 
the  Congress  of  the  United  States  declared  that  a  state  of  war  existed 
between  this  country  and  Germany  every  blow  struck  at  Germany  by 
any  of  her  enemies  was  struck  also  in  our  interest. 

Now,  listen  to  Mr.  LaGuardia,  of  New  York,  who,  as  lie  said, 
did  not  figure  on  the  complete  restitution  of  the  $3,000,000,000 

loan  to  be  made  to  foreign  governments : 

Yes  ;  I  believe  that  a  good  portion  will  be  in  due  time  returned,  but 
I  am  certain  that  some  of  it  will  have  to  be  placed  on  the  profit-and-loss 
column  of  Uncle  Sam’s  books.  Let  us  understand  that  clearly  now 
and  not  be  deceived  later.  Even  so,  if  this  brings  about  a  speedy  termi¬ 
nation  of  the  European  war  and  permanent  peace  to  our  own  country, 
it  is  a  good  investment  at  that. 

And  last  of  all,  so  far  as  the  House  is  concerned,  I  want  to 
quote  from  another  distinguished  Member,  who  happily  is  also 
still  with  us  and  held  in  the  highest  honor,  Mr.  Madden,  of 
Illinois : 

We  have  already  declared  war,  and  we  are  not  prepared  to  begin  to 
fight  the  war  we  have  declared.  If  we  can  find  somebody  else  to  fight 
the  war  for  us  with  our  money  we  ought  not  to  hesitate  to  grant  them 
the  credit  which  they  want  and  must  have.  There  is  no  way  to  win 
this  war  except  by  men  and  money.  We  are  not  prepared  to  furnish 
the  men  to-day,  and  somebody  else  is  prepared  to  furnish  the  men  if 
we  furnish  the  money.  I  do  not  agree  with  the  statement  that  we  are 
furnishing  this  money  for  somebody  else  to  wage  war  on  their  own 
account,  but  we  are  doing  our  part  to  wage  the  war  in  which  we  are 
engaged. 

And  again,  on  the  same  day,  Mr.  Madden  said : 

If  the  men  who  have  not  the  money  and  who  are  able  to  fight  are 
willing  to  fight  and  offer  their  lives  for  the  preservation  of  American 
honor  and  for  the  liberty  of  the  world,  then  the  men  who  are  not  able 
to  fight  but  who  have  had  the  good  fortune  to  make  money  ought  to 
help  to  pay  the  bill.  *  *  *  Everyone  knows  that  we  will  not  have 

an  army  in  the  field  for  a  year,  or  more  than  a  year,  and  our  duty  to 
posterity  and  to  liberty  is  to  do  everything  we  can  to-day  to  win  victory 
for  the  American  people  and  for  the  liberty  of  the  world. 

Mr.  Miller,  of  Minnesota,  asked : 

Do  I  understand  the  gentleman  to  mean  that  these  loans  we  are  going 
to  make  are  not  to  be  repaid? 

And  Mr.  Madden  replied : 

I  would  not  care  whether  they  were  repaid  or  not.  We  are  starting 

out  to  win  a  victory,  as  I  understand  it,  to  maintain  American  rights; 

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End  if  we  can  maintain  American  rights  by  furnishing  money  to  some¬ 
body  willing  to  fight  our  battles  until  we  are  prepared  to  fight  those 
battles  lor  ourselves  we  ought  to  do  it. 

Mr.  Moore,  of  Pennsylvania,  inquired: 

The  gentleman  knows  that  if  the  foreign  governments  do  not  pay 
the  money  they  borrow  from  us  the  people  of  the  United  States  will 
have  to  pay  it? 

And  again  Mr.  Madden  replied: 

I  am  one  of  the  American  people  who  is  ready  to  pay  my  share  of 
the  obligation,  and  I  shall  have  to  pay  as  much  of  the  money  that  is 
to  be  raised  in  taxes  as  most  of  the  men  in  the  United  States  will 
have  to  pay,  and  I  am  ready  to  do  it  to  the  extent  of  every  dollar 
I  own. 

What  was  said  in  the  Senate  was  very  like  what  had  been 
said  in  the  House.  I  will  quote  only  a  few  passages,  and  first 
of  all  from  the  then  chairman  of  the  Finance  Committee,  Sena¬ 
tor  Simmons,  of  North  Carolina: 

Mr.  President,  we  have  not  the  men  to  send  over  there  at  present  to 
help  fight  our  battles ;  our  Navy  possibly  can  be  of  but  very  little  use 
in  present  conditions.  It  will  be  long,  weary  months  of  waiting  before 
we  shall  be  able  to  render  much  assistance  to  our  allies  in  the  field. 
The  help  this  bill  offers  is  an  earnest  and  a  guaranty  which  carries  hope 
and  assurance  of  greater  assistance  and  helpfulness  in  the  future.  It 
will  assure  them  that  in  this  great  cause  we  stand  ready  to  risk  life 
and  fortune.  Uet  us  do  this  heartily,  cordially,  unanimously,  and 
without  hesitation  ;  let  us  do  it  in  the  spirit  of  men  who  thoroughly 
understand  and  comprehend  the  great  cause  in  which  we  are  fighting, 
the  great  thing  that  we  are  undertaking,  and  who  are  entering  into 
it  without  thought  of  profits,  without  thought  of  financial  loss,  without 
thought  of  the  bodily  discomfort,  without  thought  of  the  sacrifice,  hut 
ready  and  willing  to  make  every  sacrifice. 

A  little  later  Senator  McCumbee,  of  North  Dakota,  who 
subsequently  became  chairman  of  the  Finance  Committee,  spoke 
as  follows: 

While  we  are  recognizing  that  we  are  putting  $7, 000, 000, 000  into  the 
battle,  we  must  not  fail  to  recognize  that  we  are  not  as  yet  putting  in 
a  single  one  of  our  American  soldiers,  while  blood  is  being  jooured  out 
by  our  allies  in  unstinted  measure.  *  *  *  It  is  probably  true  that 

more  than  a  quarter  of  a  million  men  are  going  down  to  death  or  are 
being  wounded  or  captured  every  month  during  the  contest.  There¬ 
fore,  while  they  are  suffering  to  that  extent,  we  ought  to  be  mighty 
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liberal  in  the  expenditure  of  money  when  we  can  take  no  part  in  the 
real  battle,  which  to-day  is  the  battle  of  the  American  people. 

Let  me  quote  next  from  the  present  chairman  of  the  Finance 
Committee,  Senator  Smoot,  of  Utah : 

The  $3,000,000,000  which  we  are  proposing  to  raise  by  a  bond  issue 
for  the  purpose  of  advancing  it  to  the  Allies,  I  believe,  Mr.  President, 
will  all  be  repaid  ;  but  if  it  should  not  be,  or  if  not  one  penny  of  it  is 
returned,  I  wish  to  say  now  that  every  penny  of  it  will  be  expended 
for  the  defense  of  the  principles  in  which  we  believe  and  which  we 
entered  the  war  to  uphold.  Mr.  President,  I  think  that  every  dollar 
that  will  be  expended  under  the  provisions  of  this  bill,  if  it  is  expended 
honestly,  will  he  for  the  benefit  of  the  United  States,  whether  spent 
by  us  or  by  the  Allies. 

The  junior  Senator  from  Iowa,  Senator  Kenyon,  also  spoke 
on  that  day,  and  among  other  things  that  he  said  was  this : 

I  wrant  to  say  this  for  myself,  Mr.  President,  that  I  hope  one  of 
these  loans,  if  we  make  it,  will  never  be  paid  and  that  we  will  never 
ask  that  it  be  paid.  We  owe  more  to  the  Republic  of  Prance  for  what 
it  has  done  for  us  than  we  can  ever  repay.  *  *  *  I  never  want  to 

see  this  Government  ask  France  to  return  the  loan  which  we  may  make 
to  her. 

Finally,  a  word  from  the  senior  Senator  from  Iowa  [Senator 
Cummins]  and  I  think  you  will  agree  that  he  displayed  not 
only  insight  hut  a  foresight  that  places  him  in  the  ranks  of  the 
prophets.  He  said : 

I  am  perfectly  willing  to  give  to  any'  of  the  allied  nations  the  money 
which  they  need  to  carry  on  our  war,  for  it  is  now  our  war.  I  would 
give  it  to  them  just  as  freely  as  I  would  vote  to  equip  an  army  or  to 
maintain  a  navy  of  our  own  ;  hut  I  shrink  from  the  consequences  that 
will,  in  all  human  probability,  flow  from  the  course  which  is  sug¬ 
gested  in  this  bill.  *  *  *  I  should  like  to  give  to  the  allied  nations 

$3,000,000,000,  if  they  need  the  contribution,  with  never  a  thought  of 
its  repayment  at  any  time  or  under  any  circumstances  ;  I  should  like 
to  give  that  or  whatever  sum  may  be  thought  needed  as  our  donation 
to  one  phase  of  our  own  war,  hut  I  fear  that  in  the  years  to  come  the 
fact  that  the  United  States  has  in  its  possession  bonds  of  these  great 
countries  which,  when  they  emerge  from  the  war  will  all  be  bankrupt, 
will  create  an  embarrassment  from  which  the  men  of  these  times  will 
find  it  difficult  to  escape.  I  think  it  will  cost  us  more  to  take  those 
bonds  and  to  hold  them  against  these  governments  than  it  wmuld  cost  us 
to  give  the  money,  with  a  generous  and  patriotic  spirit,  to  do  something 
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which  for  the  time  being,  for  the  moment,  we  are  unable  to  do  with  our 
own  Army  and  our  own  Navy. 

I  leave  it  to  you,  was  not  Senator  Cummins  right  both  in  his 
prognostications  as  to  what  would  happen  and  his  advice  as  to 
what  should  have  been  done? 

If  you  have  followed  the  quotation  which  I  have  read,  you 
will  have  observed  that  throughout  the  discussion  the  credits 
to  be  established  were  not  considered  as  ordinary  loans,  much 
less  as  investments.  They  were  regarded  by  Congressmen  and 
Senators  alike  as  America’s  contribution  to  the  prosecution  of 
the  war  at  a  time  when  we  were  unable  to  participate  in  any 
other  way.  Among  the  leaders  in  both  Houses,  not  only  was 
doubt  expressed  as  to  whether  these  loans  would  ever  be  repaid, 
but  indifference  was  declared  both  by  Democratic  and  Re¬ 
publican  leaders  as  to  their  eventual  repayment,  and  these 
declarations  of  indifference  were  not  very  seriously  challenged. 

We  had  not  entered  the  war  for  the  sake  of  other  countries. 
It  was  not  because  Belgium  was  invaded  or  because  France 
was  being  crushed.  It  was  not  on  behalf  of  England  or  Italy 
or  any  other  country  than  our  own  United  States.  It  was 
because  American  men,  women,  and  children  were  being  killed, 
American  rights  trampled  upon,  American  property  destroyed. 
It  was  because  we  had  discovered  the  German  Government 
inciting  an  invasion  from  -Mexico  and  promising  that  country 
a  part  of  our  territory  in  case  of  victory.  It  was  our  war  on 
our  own  behalf  because  of  our  own  manifold  and  sufficient 
grievances. 

Yet,  we  were  unable,  and  for  14  months  were  destined  to  be 
unable  to  take  any  active  part  in  the  prosecution  of  that  war. 
By  force  of  circumstance  we  were  virtually  placed  in  a  situa¬ 
tion  like  that  voluntarily  assumed  by  many  men  in  the  North 
during  the  Civil  War  who  having  been  drafted  for  the  Union 
Armies  hired  substitutes  to  take  their  places.  Being  unable  for 
lack  of  proper  preparation  to  fight  our  own  battles  we  were 
obliged  to  hire  substitutes,  as  Mr.  Madden  so  clearly  expressed 
it  at  the  time,  “  to  fight  our  battles  until  we  were  prepared 

to  fight  those  battles  ourselves.” 

78408—2005 


11 


All  that  we  could  do  during  the  14  months  of  preparation 
was  to  help  other  armies  with  funds.  And  that  we  did.  And 
the  greater  part  of  the  loans  whose  settlement  we  are  now 
discussing  is  the  result.  I  need  not  remind  you  that  the  serv¬ 
ice  to  us  ourselves  of  the  credits  we  extended  to  our  associates 
during  those  months  was  no  less  than  the  service  to  them. 
If  at  any  time  between  April,  1917,  and  June,  1918,  when  our 
effective  participation  began  those  associates  had  failed  and 
had  been  forced  to  make  a  separate  peace,  or  if  they  had 
chosen  to  make  a  separate  peace,  no  one  can  estimate  what  our 
war  would  have  cost  in  American  lives  and  treasure.  No  one 
can  calculate  what  their  holding  of  the  line  saved  to  the 
United  States  in  men  and  in  money.  But  certainly  the  funds 
we  offered  freely  to  them  then,  and  which  we  are  reclaiming 
now,  saved  a  vast  number  of  precious  lives  for  us. 

As  General  Pershing  said  in  a  speech  in  Denver,  August 
23,  1924: 

If  it  had  not  been  that  the  Allies  were  able  to  hold  the  lines  for  15 
months  after  we  entered  the  war,  held  them  with  the  support  of  the 
loans  we  had  made,  the  wTar  might  have  been  lost.  We  scarcely 
realize  what  those  loans  meant  to  the  Allies  and  to  us. 

And  then  he  added: 

It  seems  to  me  that  there  is  some  middle  ground  where  we  should 
bear  a  certain  part  of  the  expense  in  maintaining  the  allied  armies 
on  the  front  while  we  were  preparing,  instead  of  calling  all  this  money 
a  loan  and  insisting  upon  its  repayment. 

These  are  considerations,  my  colleagues,  for  us  to  remember 
in  discussing  the  return  of  advances  made  in  1917  and  1918 
to  our  brothers  in  arms  of  Italy  and  Belgium,  and  to  be  re¬ 
membered  also  later  on  when  we  discuss  the  advances  made 
to  France  during  the  same  period.  These  advances  were  not 
regarded  at  the  time  as  ordinary  borrowings.  They  were  vir¬ 
tually  our  only  substantial  contribution  to  the  carrying  on  of 
our  war  during  nearly  three-quarters  of  the  period  of  our  par¬ 
ticipation.  They  were  the  means  of  saving  for  us  vastly 
greater  expenditure  and  of  sparing  hundreds  of  thousands  of 
American  lives.  We  can  no  more  consider  to-day  those  ad¬ 
vances  as  mere  business  dealings  between  borrowers  and 
78498—2005 


12 


lenders  than  did  those  who  authorized  them  nine  years  ago. 
[Applause.] 

In  arranging  terms  for  the  settlement  of  such  advances  we 
should  be  short  in  memory  and  small  in  spirit  if  we  did  not 
bear  these  facts  in  mind — if  we  did  not  look  behind  the  strict 
letter  of  the  obligation.  Congress,  in  fact,  made  provision  for 
such  considerations  when  it  instructed  the  Debt  Funding  Com¬ 
mission  to  arrange  settlements  which  they  believed  to  be 
“just,”  and  Congress  will  bear  these  facts  in  mind  in  ap¬ 
proving  or  disapproving  the  terms  of  the  several  agreements 
submitted  by  the  commission  to-day. 

And  now  in  the  few  moments  that  remain  may  I  try  to 
express  an  opinion  upon  those  agreements  in  the  light  of  what 
has  gone  before? 

The  settlements  with  Latvia,  Esthonia,  Czechoslovakia,  and 
Rumania  were  exclusively  for  postwar  loans,  and  the  con¬ 
siderations  to  which  I  have  tried  to  draw  attention  are  not 
applicable  to  them.  Their  loans  were  not  incurred  for  carry¬ 
ing  on  the  war,  but  for  local  relief  and  stabilization  after  the 
war.  The  arrangements  made  for  repayment  by  these  four 
countries  seem  eminently  fair. 

The  arrangement  with  Italy  must  also  be  considered  generous 
and  fair.  During  the  war,  Italy  borrowed  from  the  United 
States  a  little  more  than  a  billion  dollars — $1,031,000,000 — and 
after  the  war  somewhat  over  six  hundred  millions — $617,- 
000,000.  The  terms  arranged  with  Italy  provide  for  repayment 
between  now  and  1987  of  successive  amounts,  which  if  dis¬ 
counted  at  4M  per  cent  interest  would  have  a  present  value  of 
about  $538,000,000,  or,  if  discounted  at  interest  of  3  per  cent 
would  have  a  present  value  of  $791,000,000.  In  effect,  what 
we  are  really  asking  Italy  to  pay  is  a  total  roughly  equivalent 
to  her  post-armistice  borrowings.  We  are  forgiving  or  cancel¬ 
ling  an  amount  equal  to  the  loans  extended  to  Italy  for  carry¬ 
ing  on  the  war,  and  asking  her  only  to  repay  the  equivalent 
of  the  loans  made  afterwards  for  rehabilitation  purposes.  The 
Italian  people  rendered  invaluable  service  to  our  common  cause. 
They  made  tremendous  sacrifices  of  men  and  money.  They 

are  hard  pressed  in  consequence.  We  can  well  afford  to  share 
78498—2005 


13 


in  tii is  way  the  expense  of  the  battles  they  fought  while  we 
were  preparing.  [Applause.] 

I  agree,  however,  with  those  who  have  expressed  the  idea 
that  what  is  fair  for  Italy  would  seem  at  least  equally  fair 
for  France.  For  without  the  slightest  question,  of  all  the 
countries  associated  with  us  in  the  war,  France  bore  the  brunt 
and  the  heaviest  burden.  Italy  lost  nearly  700,000  lives  in  the 
war,  but  France  lost  nearly  1,700,000.  The  pensions  for  war 
victims  in  the  two  countries  respectively  stand  in  about  the 
same  proportions.  The  war  damage  on  Italian  soil  reached  a 
total  of  about  20,000,000,000  lire,  but  the  war  damage  in  France, 
wrought  by  most  of  the  armies  of  the  world,  including  our 
own,  amounted  to  over  100,000,000,000  francs,  or  fivefold  that 
of  Italy.  The  internal  debt  of  Italy  amounts  to  about  90,- 
000,000,000  lire ;  that  of  France  to  more  than  three  times  as 
much,  or  roughly  300,000,000,000  francs.  The  foreign  debt  of 
France  is  more  than  double  that  of  Italy.  If  justice  and 
equity  demand  leniency  in  the  case  of  Italy,  it  would  seem 
even  more  so  in  the  case  of  France. 

And  what  is  fair  for  Italy  would  seem  to  be  equally  fair  for 
Belgium,  the  most  appealing  of  the  nations  that  suffered  in  the 
war.  In  all  the  hue  and  cry  about  “  war  guilt  ”  no  one,  not 
even  the  ex-Kaiser,  has  ever  accused  Belgium  of  responsibility 
for  it.  In  everyone’s  opinion  Belgium  was  the  most  innocent 
as  well  as  the  most  complete  of  the  war’s  victims.  I  must  con¬ 
fess  to  no  satisfaction  in  one  feature  of  the  settlement  with 
Belgium,  and  that  is  this :  Of  the  countries  that  loaned  her 
money  when  her  territory  was  under  the  Kaiser’s  heel  and  her 
Government  was  in  exile,  the  United  States  has  the  distinction 
of  being  the  only  one  to  demand  repayment  of  such  loans.  Eng¬ 
land  loaned  her  more  than  $500,000,000  at  that  time  and 
France  loaned  her  more  than  $800,000,000,  and  they  both  are 
in  greater  need  of  payment  than  we  are,  yet  they  have  not 
asked  and  never  will  ask  Belgium  to  repay.  The  United  States 
loaned  Belgium  less  than  a  third  as  much — $171,000,000 — and 
the  United  States,  though  the  richest  country  on  the  earth,  is 
the  only  one  to  ask  Belgium  for  reimbursement.  I  can  not  feel 

proud  of  the  distinction.  The  agreement  of  the  Debt  Funding 
78498—2005 


14 


Commission  to  eliminate  all  interest  on  these  loans,  which  is 
a  virtual  cancellation  of  more  than  three-quarters  of  their 
capital  value,  seems  a  half-hearted  acknowledgment  of  the 
equities  in  the  case  which  is  neither  logical  nor  generous.  I 
shall  vote  for  the  Belgian  settlement  with  reluctance  on  that 
account. 

One  more  word  in  conclusion.  It  is  not  certain  that  “  ca¬ 
pacity  to  pay  ”  is  the  only  factor  to  be  taken  into  account  in 
arranging  these  settlements.  It  is  not  clear  that  “  just  ”  set¬ 
tlements  according  to  the  intent  of  Congress  can  be  made 
simply  by  applying  that  formula,  by  merely  estimating  how 
much  these  peopje  can  be  made  to  pay,  or  how  much  they  and 
their  children  and  grandchildren  may  be  able  to  pay  between 
now  and  the  year  1987  through  toil  and  taxes  and  squeezing 
the  last  penny  out  of  Germany.  I  am  not  sure  that  even  in 
terms  of  avarice  our  people  would  win  the  greatest  possible 
gain  by  rigid  adherence  to  this  principle.  I  suspect  that  they 
will  make  more  money  in  the  long  run  by  treating  other  peoples 
as  prospective  customers  rather  than  as  debtors,  to  be  forced 
through  bankruptcy.  And  I  fully  believe  that  if  we  should 
insist  upon  this  formula  of  “  capacity  of  pay  ”  during  the  next 
62  years  we  would  not  contribute  as  much  as  we  might  to  the 
reestablishment  of  good  will  among  men  and  of  peace  among 
nations.  By  keeping  up  such  pressure  for  several  generations 
we  would  promote  better  relations  neither  between  ourselves 
and  our  former  allies  nor  between  them  and  the  ex-enemy 

countries.  [Applause.] 

78498 — 2005 


15 


EXTENSION  OF  REMARKS 

OF 

HON.  A.  PIATT  ANDREW 

OF  MASSACHUSETTS 

In  the  House  of  Representatives 

Saturday,  January  16,  1926 

Mr.  ANDREW.  Mr.  Speaker,  under  the  permission  granted 
me  by  my  colleagues,  I  desire  to  insert  in  the  Record  the  text 
of  the  resolution  which  I  introduced  last  week  asking  that 
terms  as  favorable  as  those  which  we  yesterday  voted  for  the 
Kingdom  of  Italy  be  extended  to  the  Republic  of  France. 

In  substance,  as  I  explained  on  Wednesday,  we  have  agreed 
to  wipe  off  from  the  account  with  Italy  a  sum  equal  to  that 
which  the  United  States  loaned  to  Italy  for  carrying  on  the 
war.  We  only  ask  Italy  to  repay  in  the  next  62  years  an 
amount  equivalent  to  that  which  the  Italian  Government  bor¬ 
rowed  after  the  armistice. 

In  view  of  the  fact  that  France  lost  nearly  1,700,000  of  her 
youth  in  the  war,  while  Italy  lost  about  700,000,  and  that  the 
devastation  in  France  caused  by  the  war  was  fivefold  that  in 
Italy,  justice  and  equity  would  seem  to  demand  at  least  equal 
forbearance  toward  France. 

The  following  is  the  text  of  the  resolution  (H.  J.  Res.  101)  : 
Joint  resolution  authorizing  the  extension  to  the  Government  of  Franee 
of  as  favorable  terms  for  the  settlement  of  its  obligations  as  have 
been  or  may  be  granted  to  any  of  the  other  governments  asso¬ 
ciated  with  the  United  States  in  the  World  War  in  the  settlement 
of  similar  obligations 

Whereas  the  acts  of  April  24  and  September  24,  1917,  authorizing  the 
Secretary  of  the  Treasury  to  establish  credits  for  governments  “  then 
engaged  in  war  with  the  enemies  of  the  United  States  ”  declared  that 
these  credits  were  “  for  the  purpose  of  more  effectually  providing  for 
the  (our)  national  security  and  defense  and  prosecuting  the  (our)  war, 
aud  these  acts  were  adopted  at  a  time  when  the  United  States,  then 
engaged  in  war,  had  no  trained  troops  with  wrhicli  to  oppose  the  enemy, 
aud  the  credits  so  authorized  were  intended  to  make  available  for  the 
troops  of  other  nations  associated  with  us  the  iron,  steel,  copper,  chemi¬ 
cals,  shells,  rifles,  powder,  explosives,  and  sundry  other  supplies  which 
they  could  use  in  holding  back  the  enemy  and  which  then  existed  or 
could  be  produced  in  the  United  States  in  abundance  ;  and 

Whereas  a  considerable  part  of  what  is  to-day  charged  against  the 
Government  of  France  is  the  cost  (at  war  prices  paid  to  American 
manufacturers)  of  such  supplies  used  by  French  soldiers  during  a 
period  of  approximately  14  months  after  our  entrance  in  the  war, 
when  the  United  States  was  unable  to  contribute  men  in  substantial 
numbers,  and  such  supplies  represent  the  principal  contribution  made 
by  the  United  States  to  the  prosecution  of  the  war  during  the  greater 
part  of  the  19  months  of  our  participation,  in  wThich  time  hundreds  of 
thousands  of  the  youth  of  France  were  mutiliated  aud  killed  while  our 
troops  were  being  mobilized  and  trained  ;  and 
78498—2005 


16 


'Whereas  the  Government  of  France  confronts  to-day  a  most  serious 
financial  situation — 

(1)  Because  of  debts  amounting  to  more  than  300,000,000,000  francs 
Incurred  in  the  prosecution  of  the  war,  to  which  have  been  added 
debts  amounting  to  approximately  80,000,000,000  francs  incurred  in 
restoring  the  homes,  schools,  and  churches,  the  stores,  factories,  and 
mines,  the  bridges,  railroads,  and  farms  of  France  destroyed  by  the 
armies  of  the  world,  including  our  own; 

(2)  Because  of  inability  to  recover  from  the  ex-enemy  governments 
but  a  small  fraction  of  the  reparation  for  such  destruction  promised 
by  the  terms  of  the  armistice,  which  our  Government  not  merely 
agreed  to  but  formulated  ; 

(3)  Because  nearly  200,000  of  the  893,000  buildings  destroyed  in 
France  have  still  to  be  rebuilt,  and  annual  pensions  have  to  be  paid 
to  widows,  orphans,  and  dependent  parents  of  1,700,000  French  sol¬ 
diers  who  died  in  the  war  and  to  more  than  a  million  mutilated  and 
disabled  French  veterans  (a  heavy  burden  because  of  the  numbers  in¬ 
volved,  even  though  the  individual  pension  rarely  reaches  a  fifth  of 
the  amount  paid  to  our  own  war  victims)  ; 

(4)  Because  the  money  of  France,  seven  years  after  the  war,  is 
depreciated  to  less  than  a  fifth  of  its  former  value,  so  that  all  that 
the  French  people  had  saved  and  invested  in  bonds  or  savings  accounts 
before  the  war,  and  all  that  they  loaned  to  their  Government  for 
carrying  on  the  war  has  ali'eady  lost  more  than  four-fifths  of  its  value ; 

(5)  Because  the  French  people  in  recent  years  have  been  taxed  to 
fully  20  per  cent  of  their  total  income,  or  nearly  double  the  heavy 
percentage  prevailing  in  the  United  States,  and  their  treasury  has 
been  unable  to  meet  bonds,  maturing  this  year  amounting  to  many 
billion  francs,  without  vast  additional  issues  of  paper  money,  which 
threaten  the  misfortunes  of  further  depreciation,  on  all  of  which 
accounts  the  Government  of  France  has  greater  financial  difficulties 
to  overcome  than  at  any  time  since  the  end  of  the  eighteenth  century  ; 
and 

Whereas  in  the  period  of  America’s  most  extreme  need  France  gave 
generous  aid  to  the  United  States  not  only  (1)  in  loans,  when  no 
other  country  would  extend  her  credit  (on  some  of  which  interest  was 
remitted,  but  also  (2)  in  outright  gifts  of  money,  and  above  all  (3) 
through  an  expeditionary  land  and  sea  force,  which  contributed  indis¬ 
pensably  to  the  victory  at  Yorktown  and  our  independence,  which  is 
estimated  to  have  cost  France  over  $700,900,000,  and  for  which  she 
asked  no  recompense  whatever ;  and 

Whereas  the  situation  is  to-day  reversed,  and  while  France  is  in 
extremities,  the  United  States  occupies,  as  President  Coolidge  has  said, 
“  a  position  unsurpassed  in  former  human  records,”  being  far  more 
prosperous  than  before  the  World  War,  with  no  ruins  to  repair,  a 
currency  that  is  unimpaired,  half  the  world’s  gold  in  our  vaults  (the 
greater  part  of  which  has  been  drawn  from  other  countries  since  the 
World  War  began),  and  being  able  to  provide  liberally  for  our  own 
war  victims,  to  reduce  taxes,  and  at  the  same  time  pay  off  annually 
a  billion  dollars  of  the  Government’s  debt: 

Resolved,  etc..  That  the  World  War  Foreign  Debt  Commission  is 
urged  to  take  account  of  the  circumstances  and  equities  heretofore 
named  and  is  authorized  to  extend  to  the  Government  of  France  as 
favorable  terms  for  the  settlement  of  its  obligations  as  have  been  or 
may  be  extended  to  any  of  the  other  governments  associated  with  the 
United  States  in  the  World  War  for  the  settlement  of  similar  obliga¬ 
tions. 

78498—2005 


O 


